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Tariff Reform in the Presence of Sector-Specific Distortions

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  • John Beghin
  • Larry S. Karp

Abstract

The problem of choosing second-best trade policies is modified by including sector-specific policies as well as tariffs. Formulae for the optimal tariff and sector-specific subsidy are derived and used to study the design of optimal policy menus. The theory is applied to a computable general equilibrium model of the U.S. economy that emphasizes agriculture. The model suggests that nonagriculture distortions do not provide a second-best argument for substantial levels of agricultural protection.

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  • John Beghin & Larry S. Karp, 1992. "Tariff Reform in the Presence of Sector-Specific Distortions," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 294-309, May.
    • Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:294-309
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    Cited by:

    1. Karp, Larry S., 1997. "A Neoclassical View of Trade Liberalization," CUDARE Working Papers 6242, University of California, Berkeley, Department of Agricultural and Resource Economics.

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